And speaking of dimwits...

- The Fed settled down last
week, but the Treasury admitted that the national debt zoomed
to a new record which is, as of today, $7.994 trillion, which
is why I am hiding in the closet under the stairs. What makes
this interesting is that, at our average rate of acquiring new
debt, we will hit the new Congressionally-mandated debt ceiling
($8,314 billion) in the next couple of months. And what will
our Congresspersons do then? Hahaha! You guessed it! They'll
raise the limit again! Par-tay down, dudes!

Well, I am not in a partying mood, as I noticed that my car had
a flat tire, and I had to take it to be fixed, and they, of course,
all went to the back of the garage and laughed at me and whispered
among themselves, and then came back and told me that they could
not fix it, and I had to buy a whole new tire.

But while I was waiting for
everybody to stop drinking coffee and maybe do a little work
around here, like maybe mounting my damned new tire on the damned
rim, you lazy bastards, I casually noted that they were not very
busy, as every OTHER time I came in here in the past, there were
always guys ahead of me and their cars were in the bays getting
fixed, and people bustled around, and things got done (to use
a Chinese expression) plenty chop chop. The guy says that, yeah,
things are slow. The telephone repair guy, who was supposed to
be fixing the phone but was instead eavesdropping on our conversation
when he was supposed to be working, says that it is that way
all over town, and that everybody is complaining about how slow
things are. Spooky!

But all I keep hearing is about
how the earnings of companies are going up and up, and how this
means growth, growth, growth, and how this means that everything
is wonderful wonderful wonderful, and how this means you should
be buying stocks and bonds right now with all your money.

Growth? If Mogambo Manufacturing
sold one widget last year for ten bucks, and this year we sold
one widget for eleven bucks, my earnings went up. But did I grow?
I still only made one lousy widget! Hahaha! Growing? Growing
more cold-hearted and cruel perhaps, especially as concerns my
looting the pension fund of the idiot employees and selling their
ugly children to gypsies at the company picnic. But growth as
a healthier, bigger company? Ha! Don't make me laugh!

But you can hear the American
economists, the dumbest guys on earth, all saying "But Mogambo,
you big fat idiot, GDP went up by 10%!" And then everyone
agrees that GDP went up by 10% and that The Mogambo is a big
fat idiot, and then people call my wife up, and laugh at her,
and say hurtful things like "Haha! Your husband is a big
fat idiot!" and she says "I know, mom! I know!"

But then the retailer guy who
bought that widget for $11 says "But inflation was 10%!"
So, net net net, the economy did NOT grow at all! And don't get
complacent on me, because we are not done yet! No, sir! I'm just
getting STARTED getting angry! Not only that, but the price of
widgets to the final consumer, meaning you and me, went up not
by 10%, but by 11% or 12%, as all those middlmen try to protect
their profit margins!

So inflation went up for all
of us final consumers out here, you and me, who pay the full
price for everything, and the full price for everybody, up and
down the whole freaking line, including outrageous executive
paychecks and perks, by charging the end-user another 11%, or
12% or 13% or whatever the retailer can get out of me! But, but,
but, and notice how I am stammering here in my outrage, but the
government does not count the 10% inflation figure to calculate
the inflation adjustment to raw GDP to get "real" GDP!
They have new, weird ways of "adjusting" 10% raw inflation
down to a lousy 2%! Or less, if they want!

And so when we worthless employees
try and get a little raise to offset these rising prices, they
laugh in our faces, and say "But the government says that
inflation is only 2%! You employees are idiots, because only
idiots listen to The Mogambo!" And the guy getting the fixed
pension knows that he is getting screwed by at least 2%, but
it feels like more (and it is) than that. And the people living
on Social Security start getting pinched, and they want to know
why the Cost of Living Adjustment (COLA) is so meager, and they
get grumpy.

So the final consumer, me and
you, gets screwed, and we get it good and hard in the checkout
line, and the cashier is ringing up our purchases by scanning
the bar code across the scanner, all day long, pick it up and
scan it, pick it up and scan it, and so it is a real crappy job,
and she is plenty angry about the rotten job and the lousy pay
which does not even keep up with inflation and her husband's
Social Security check doesn't seem to go as far, and then she
gets all testy with me like it is MY fault or something, just
because I innocently mentioned, just trying to make a little
friendly conversation, that the hairs on her chin made her look
like a goat. But old Mrs. Goatface and her testy attitude is
right, and we are all getting screwed as far as measuring GDP
is concerned, because our wages did not go up, and inflation
is covered up by lying with statistics, and we buy less and less
stuff each month as a result. I hate the thought! Buying less
and less stuff every month? I hate it! I want to buy MORE stuff
every month!

- Analyst Mark Lunden, who
sent a NY Times article reporting that "The federal government
contends that General Motor's pension fund is $31 billion short
of what it owes its work force, according to closely held government
data, a figure in stark contrast to G.M.'s assurances that its
pension plans are 'fully funded.' "

The company had a plan in case
anybody brought this up. So, implementing Plan A, they trotted
out a guy named Jerry Dubrowski to act as spokesman for the automaker,
and he said, "There is no reason to expect that G.M.'s pension
plans will be terminated, and to assume otherwise is to unnecessarily
alarm the many thousands of people who rely upon those plans
for their retirement." Hahahaha! There is no reason to expect
it? This reminds me of the concept of Probalism, which is the
philosophy heralded by the Environmental Protection Agency and
championed by David Bond, which contends that if something cannot
be proven to be false, then it is thus proven to be true! Hahahaha!

"There is no reason to
expect" it? $31 billion dollars short right now, and with
sales in the toilet pension problem will just get worse and worse?
And this $31 billion shortfall came at a time when things were
good, and yet, now that they are not so good, "there is
no reason to expect" that maybe, just maybe, the G.M. pension
plan will be terminated, or changed, or jettisoned, or anything?
Hahahaha! And did you crack up when he said "And to assume
otherwise is to unnecessarily alarm" people? Hahahaha! Me
too! "Yes, I saw the anvil was going to drop on your head,
but to admit even the possibility of it falling on your head
would be to unnecessarily alarm you!" Hahaha!

- Marshall Auerback, in his
last regularly-scheduled essay
for the Prudent Bear site before he retires, or leaves, or quits,
or starts devoting his life to tracking the Mogambo down and
knocking some sense into my thick head, writes about the probable
course of the economic future as he rides off into the sunset.
As we wave goodbye, he notes that the ways countries use to extract
themselves from their international balance of payments problems
are protectionist, namely the government (which needs the money)
imposes taxes, and surcharges, and fees, and duties on imports,
which also allows domestic companies to compete in a high-priced
market. It is a loser of an idea in many, many ways, one of which
is that "to the extent it succeeds in reducing the imbalances
in US trade, it also reduces the increase in dollar savings held
in the hands of foreigners, which in turn places the greenback
in a vulnerable position. Assuming no change in their portfolio
preferences away from US assets (a not entirely realistic assumption,
as there may well be some form of retaliation which reduces the
proclivity to hold dollars), there is in fact less foreign savings
available then for them to disperse additional external financing
requirements at the margin."

In short, if they sell less
to us, they get less money, and then they can't loan us more
money, which we need to keep borrowing to keep this consumerist
expansion going! It's a vicious circle! Yikes!

Then there is the biggest,
baddest thing (BBT) that the government can do. "There is
a yet a more radical option: the US might simply resort to outright
debt repudiation." But would the USA do such a thing? Hell,
yes! We'll break any agreement, with anybody, when there is the
slightest advantage to it for the government! We're real scumbags
in that department!

But Mr. Auerback, always too
classy a guy to say such things, is repulsed by my words and
actions, and says only "There is ample historic precedent
for breaching previously agreed legal international obligations."

I guess that would send people
scurrying to get gold! But Mr. Auerback looks at me with
more undisguised contempt and says "Ultimately, it would
not surprise us to see various restrictions imposed in regard
to the holding of foreign currencies and gold.
As recently as the early 1970s, Arthur Burns, then Fed Chairman,
railed against the 'unsound practice' of Americans having foreign
currency bank accounts." Mr. Auerback may be too classy
a guy to bring up the point that Arthur Burns was, as I understand
it, a pretty terrible Fed chairman, and he caused one hell of
a mess, but I am not. Maybe not as bad as Alan Greenspan, of
course, but pretty bad.

Perhaps this is what prompted Chris Laird, who puts out the Prudent
Squirrel Newsletter, to write "So whether it's hyperinflation
with a resultant mad rush to buy anything real, or a currency
crisis where there is a mad rush to buy any currency other than
the USD, people with large amounts of cash are asking for big
trouble. All the government has to do is freeze or semi-freeze
your bank accounts. They have already done this in the past,
and I guarantee that if the US were to enter into a real bona
fide dollar crisis, they certainly will freeze most bank accounts."

- To show you the vacuity of
the Federal Reserve and the whackos who infest it, nothing could
be better than the juxtaposition of two headlines on the goldSeek.com
site. The first one was
Thomas Hoenig, president of the of the Kansas City Federal Reserve
Bank, which reads "Little risk of inflation surge: Hoenig"
immediately followed by a Reuters article entitled "Services
sector hurt by spiraling prices."

- Richard Greene of Thunder
Capital wrote an interesting essay entitled "Greenspan's
greatest gift", which is a surprising title, as the
only gift I want to give him is a couple of hard thumps to his
stupid head, big enough to raise a nasty lump, so that when people
ask him "Alan, where did you get those horrible bumps on
your poor head?" he can tell them that The Mogambo put them
there as a punishment to him for acting so stupidly and irresponsibly,
and also as a warning to the guy who is going to be NEXT chairman
of the Federal Reserve. So you can imagine my trepidation in
reading what he wants to give ME! But this is not, thankfully,
about that. In fact, Mr. Greene goes out of his way to praise
the guy, like when he says, "While in no way condoning Greenspan's
policies and realizing they will result in an economic disaster
eventually, I can't help being impressed with his mastery of
the press, Wall Street, and the common man to perpetuate this
fraud.

"I, for one have been
amazed at how long this has gone on. It has been over five years
since the stock market bubble burst, yet he has managed to float
the economy on a sea of debt while not only convincing the masses
that everything is all right, but also that they were getting
rich on real estate." Hahahaha! Yeah! I know! Weird, huh?
I can't believe we fell for that one!

Apparently, neither can Mr.
Greene, who says "With only a reasonable amount of economic
understanding one should have identified the unsustainable nature
of the last few years' expansion." But this is not, for
a change, an editorial about how stupid we Americans are, but
how gullible we are. "Thanks to Alan Greenspan's skillful
manipulations," Mr. Greene goes on to say, "not many
have identified the opportunity at hand. For those of us that
have, the appearance of a healthy economy has prolonged our opportunity
to accumulate gold and silver
at bargain levels. In due time this, will be seen as Greenspan's
greatest gift." Hahahaha! How ironic! Greenspan, who started
out as a gold-loving, hard-money man himself, and
then repudiating it, ends up destroying the American dollar,
and thus proving the case for gold! So
he's right! It is a gift! I never thought that I would be saying
this, but "Thanks, Alan!"

- In an interesting essay entitled
"Myths
about gold & the money supply" by Aubie Baltin,
PhD, he argues that the only real measure of the money supply
is cash and checking account money. Noticing that my eyes have
this vacant look, he knows that he must start with the basics.
"Before we start," he says, "some definitions
regarding the money supply are in order. M1 Money Supply; consists
of cash plus checking accounts and travelers checks. M2, consists
of M1 plus retail money market funds, savings and small time
deposits. M3, consists of M2+ large time deposits, Eurodollars
& large money market funds."

He immediately starts off positing
that a "Large portion of the M3 money supply is not really
money and should not be included in any money supply discussions.
Real money is defined as cash or checking account money".
It is about this time that I am starting to nod off, because
this looks like this discussion is tending towards the pedantic
and theoretical, and that intellectual stuff really bogs me down
because I am too stupid to understand it, for one thing, and
too lazy to even try for another, so it is a big waste of time
for us both, and pretty soon I am doodling in my notebook, mostly
consisting of these cool bomber aircraft dropping all these big
bombs all over everything, and there are explosions everywhere,
and I am laughing at watching my enemies being blown to pieces!
Ha! Take that! Ker-bloom!

But this Baltin guy knows how
to get under my skin, and that is to mention inflation. Seeing
that I am falling asleep in his stupid class and actually seem
to be snoring, I get a whiplash in my neck as I snap to full
Mogambo alert (FMA) when he mentions that if you really, really
want to see the inflation in the money supply, then "the
real inflation-inducing money supply (M1) in the last 10 years
(1994 to 2004) has increased by $2.2 trillion, not by the $190
billion reported." Hmmm! If inflation in prices follows
the inflation in the money supply, then this 1,160% increase
is a serious increase in the money supply! Which implies, and
you can check my math here, that we are going to have a serious
increase in prices, which is caused by a serious increase in
the money supply, which is causes a fall in the purchasing power
of each dollar, and the increase in the money supply was, checking
my figures again, more than 1000%. In ten years!

So where did all the money
suddenly come from? He explains that "It appears that there
is $1.971 trillion of money market mutual funds buried in M2
and these accounts have check writing privileges, so it is 'real'
money. In other words M1 should actually be $3.3 trillion. It
is being reported as $1.3 trillion (June 2004)."

So I don't want to tell him
that I am only taking this stupid class to learn how to make
money with this economics stuff, but what I REALLY want to know
is what does this mean to ME and how can I make money on it?

He has obviously run into my
type of lazy, greedy white trash before, and calmly says that
"These numbers imply that a severe and sustained inflation
is more likely to occur than most people suspect, which is very
bullish for gold."

And if you think YOU have trouble
with YOUR checkbook and YOUR credit cards and how YOUR whole
financial life going up in smoke right in front of your eyes
and pretty soon you are going to be ruined, then listen to how
Mr. Baltin describes "The Dilemma that Chairman Greenspan
and the Government are now faced with is: How can they continue
to print money when inflation has clearly reappeared? But how
can they not print money in the face of Katrina, Rita and Iraq?"
And, in case you want some practice for the upcoming SAT tests,
this is an example of "Damned if you do and damned if you
don't."

- For an interesting look at
hyper-inflation, gracious reader Eric Y. sent proof of the hyperinflation
of the Weimar Republic in Germany with copies of German stamps.
At the end, it cost 5 million marks to mail a letter. An interesting
sidelight is when he notes that the stamps "illustrate the
horrific inflation of post war Germany, primarily from mid-1922
to November 1923. It is my understanding that not one life insurance
policy was redeemed in Germany during 1923, as the inflation
of the latter part of 1922 was sufficient to cause the cost of
a postage stamp to exceed the face value of even the highest
of the policies in force." Hahahaha! So the owners of life
insurance get screwed, too! It cost more to write the letter
to the insurance company telling than you would get from the
settlement! And if you have a chunk of your retirement stuck
in the cash-value end of an insurance thing right now, then perhaps
there is a lesson in there for you.

Such is just one of the horrors
of hyper-inflation, my little grasshopper, as the horror of ordinary
single-digit inflation is bad enough.

And speaking of insurance policies,
from an anecdotal perspective of the SteveQuayle.com site, it
appears that something is happening with plate tectonics, and
earthquakes and volcanoes and all kinds of ugly things that result
from the earth's plates adjusting are increasing, and their latest
grabber headline is "Magnitude
4.6 - Off the Coast of Oregon. Is This the Start?" The
conclusion of the author is, "If it is, then be prepared
for some devastation over large segments of the population."
Yikes!

I wouldn't doubt it, as the
earth has received a hell of a jolt of cosmic radiation from
the sun over the last few months, and all that energy has to
go somewhere, or causes something or, perhaps in some bizarre
alchemy, be turned directly into matter for all I know. I don't
know, and I never will know because I am a real stupid guy who
never seems to learn, but I am not surprised at what seems to
be an increase in earthquakes and hurricanes and volcanic activity.
And I expect a lot more, too, particularly as I read that some
geeks think that this is just the beginning of 35 years of this,
which is the offset to the last 35 years of relative quiescence.
And this will not be good for insurance stocks, I figure, so
my latest Stupid Mogambo Investment Advice Out Of The Blue (SMIVOOTB)
is to sell insurance stocks.

And speaking of doomsday, I
am not merely one of an entire population of paranoid gold bug lunatic armed-and-dangerous loudmouth crackpots,
but I am The Mogambo, their king. As thus it has occurred to
me, and a lot of people who are just as weird as I am (and sometimes
more!), that this avian flu thing is just what the doctor ordered,
from the standpoint of solving the Medicare and Social Security
problem. I mean, what could be better than to kill all the old
people who are causing the problem? Voila! Problems solved!

- An editorial in the October
5 issue of the WSJ by Cesar Conda had this priceless quote from
a paper by Alan Blinder and Ricardo Reis, both "Princeton
economists," commenting on Alan Greenspan. They said "We
think that he has a legitimate claim to being the greatest central
banker who ever lived." Hahahaha! But what else could they
say about the guy, when they were all there at Jackson Hole to
pay homage to the damned man. But it was a little overboard for
me, so I will attack them without mercy, as that is the kind
of arrogant bastard I am.

To prove that the media is
biased against me, what you did NOT read was an editorial by
The Mogambo on the same Alan Greenspan, where I quote myself
saying "Alan Greenspan is the worst central banker that
ever lived, as will be seen shortly!" This Greenspan is
the guy that caused trillions of dollar's worth of assets to
go up in smoke in the stock market collapse in 2000. He did it
by first providing the excess money and credit which was used
to bid the assets up to unsustainable high prices, which then
collapsed in a fit of common sense, and thus produced the losses.

And then, to compound his calumny,
he tried to bail himself and the economy out of the mess he caused
by pounding interest rates to absurdly low levels, and thus screwed
the living hell out of the senior citizens out of hundreds of
billions more for years and years. And not just seniors, but
others whose incomes depended on that miserly interest income,
mostly from Certificates of Deposit and Treasury bills. And so
millions and millions of people who needed, and depended upon,
that piddly little bit of interest income suffered as they saw
their incomes slashed by two-thirds! And more! Does any of this
sound like what you would expect from the "greatest central
banker who ever lived"?

And insurers need to invest
the premiums from the policies they write. But since they cannot
make any money on bonds, thanks to Alan Greenspan driving interest
rates down and down to save his own nasty butt, the insurers
have to make up the difference by charging higher insurance premiums
to the policy holders! So we pay more, even as we get less! This
is supposed to be genius from "greatest central banker who
ever lived"?

We also saw the huge, monstrous,
freaking enormous expansion in growth and reach of all the levels
of government, all financed, in the final analysis, by the Federal
Reserve creating all that money and credit, which created tax
revenues of all kinds, which was spent on creating huge permanent
government programs. Does that sound like what you would expect
from the "greatest central banker who ever lived"?

And speaking of dimwits, let
me also say a few unkind things about Wayne Angell, former Fed
functionary of some sort and now, having been kicked out for
what I assume is (to be as snarlingly and ruthlessly unkind as
possible) incompetence and stupidity. This is the little, ummm,
person, who, not more than a couple of months ago, looked right
into the camera on CNBC, and I could see that he was using his
little weasel eyes to try and to penetrate the inner mind of
the Mogambo (IMOTM), and with a straight face and an irritating
little smirk assured us that not only IS there no inflation,
that there is not GOING to be any inflation, and that anybody
who thinks differently is, and I quote verbatim from memory because
the exact words were burned into my brain from the moment he
uttered them, "out to lunch." And then I watched helplessly
as he sat back in his chair and laughed to himself, because he
knew that The Mogambo was out here, watching, and hearing, and
now is probably exploding in outrage at such a bald-faced lie
and spitting at the television screen, which was a lucky guess
on his part.

He even brought up the fact
that inflation is "impossible" without wage growth.
Which makes sense, sort of, as people need money to keep bidding
up the prices of things. And I bring this up because some other
jerkwad "chief economist" at some doofus capital management
firm or another was on CNBC the other day (are you seeing a pattern
here?), who said the same thing, namely that inflation is "impossible"
without wage growth.

Well, that may have been true
in the old days, when America had all the money and wages and
all the foreigners were on their knees kissing our American butts
in thanks for not crushing them like the little bugs they were.
But no longer! And the ugly fact is that there is plenty of wage
growth! Just not here in America. But there is plenty, plenty
plenty big money being made in other places. Wages in China and
India, to name but two, ARE rising, and by a lot, too!

So if you insist that rising
wages are necessary for inflation, then brother, that's alright
with me, because we already got 'em! And since we got 'em, then
inflation is not far behind!

And one thing to do about that
is, as I never seem to tire of saying, buy gold.
And to show you that there is SOMEBODY listening to The Mogambo
when he declares that anybody with half a brain should prove
it by buying gold, the Economist magazine reports that
"New figures from the World Gold
Council show that demand for physical gold
is growing strongly, up by 21% in tonnage terms during the first
half of 2005 compared with the same period a year earlier. Supply,
meanwhile, increased less quickly, by just 18%, thanks partly
to slowing central-bank sales." Wow! Demand is up 21%? So
demand is higher than supply? This latter fact should ring a
little bell ("ding ding ding!"), which is Nature's
Way of reminding you that the adjustment to the disequilibrium
in demand vs. supply is always made, in the beginning at least,
through the price going up, and that the price will continue
to go up until enough demand has been destroyed by the higher
prices and new supply is brought on-line to take advantage of
the higher prices, which in turn, pushes prices back down.

And if you go all the way back
to Day One of your home-study course in The Mogambo's Famous
Lazy Man's Way To Get Rich In Investing, you will remember that
you must always try to "buy low" as the necessary precursor
to "selling high."

Putting this all together,
then I think that this means you should be buying gold with both hands. And if you are stupid enough
to take the advice of The Mogambo, then perhaps you are stupid
enough to SEND the gold to The Mogambo for "safekeeping"
after you buy it!

And Paul van Eeden, market
commentator from his site PaulVanEeden.com, is getting the heebie-jeebies,
too. "I am becoming more and more convinced that the end
of the current boom in US real estate, equities and bond markets
are upon us. Of course, it is not only impossible to predict
when markets will turn but also how the future will unfold. So
I have decided to stick with my original plan, which is to focus
on mineral exploration because of the depleting nature of the
mining industry and, within that, to focus on gold."

Alert reader Shelby M writes
to tell me that he is surprised that gold
is not higher in price, and how "Even Money magazine is
advising 5% of a portfolio into gold."
Me, too, Shelby! Me too! But summoning up profundity from the
philosophical side of the Mogambo (PFTPSOTM), I raise my face
to the heavens, and gazing out over the vastness of space and
time, declare "Thus, It's ALWAYS this way at the beginning
of an asset boom; low price and a general disinterest."
What is new THIS time around is that not only do we have a pure
fiat currency, but in the case of central banks, an actual dis-hoarding
gold, as these private banks sell their
own nation's gold into the market at such low prices!
They trust each other so much that they are willing to do the
biggest, stupidest thing that a central bank, much less ALL the
central banks, can do! It staggers the mind! And as a result,
you can still buy the stuff for less than $500 an ounce! And
don't get me started on silver,
which looks even better!

- I have discovered, to my
delight and surprise, that there is actually one man in the whole
world who is NOT out to hurt me, kill or me, or says he is going
to knock my block off if I unless I quit picking on his stupid
and hateful kids. This wonderful person is none other than Mike
"Mish" Shedlock, who writes the WhiskeyAndGunpowder.com
newsletter.

He was writing an article
about Richard Fisher, who is the president (and CEO! How convenient!)
of the Federal Reserve Bank of Dallas, and who is also a member
Federal Open Market Committee (FOMC), which is the little secret
group of private bankers who get together every month and decide
how much they are going to destroy our dollar, by deciding how
much money and credit they are going to allow themselves to create
and make a profit on. I am sure that you noticed that they do
not mention that they stand to make a profit on every dime of
money that they can create and then loan to some guy. Screw the
dollar!

So I am reading along, and
Mr. Shedlock recaps his June 13 editorial entitled "Stupid
Comments by the Fed." I remember what happened when
I read that very June 13 editorial, and believe me when I say
that people around here all remember it VERY well, as it was
in the newspapers for weeks, and the trial achieved a local notoriety
due to my legal strategy of acting crazy, mostly by suddenly
leaping to my feet and shouting "Crazy with anger! I'm freaking
crazy with anger!", and the judge would pound his stupid
little gavel bang bang bang, and that would make me even MORE
angry.

But this is not about my legal
troubles, but about how I am not surprised and angry about it
anymore, but only because I am not surprised anymore. I am still
angry. Just not surprised.

But Mr. Shedlock, who must
have been following my case in the newspapers and taken pity
upon me, for which I am grateful, actually goes out of his way
to warn me by telling me "I have a duty to tell you to have
a stiff drink (or three) before reading any further. I would
hate to be responsible for causing some kind of Mogambo consternation."
For that I am thankful, although Mr. Shedlock is obviously unaware
that recent court decisions have ruled that this does NOT constitute
a valid legal defense, and I always drag everyone down with me.

But he says "Fisher did
make two comments that are 100% believable." And they are
believable because it is exactly what The Mogambo has been screaming
himself hoarseabout. Mr. Fisher relates that "Five years
ago, Chairman Greenspan told his colleagues at the FOMC that
Information Age technology had begun rewriting the operations
manual for the economy. 'We really do not know how this system
works,' he said. 'It's clearly new. The old models just are not
working.'"

Medical after-care reports
think that this is where The Mogambo's brain neurons began overheating,
because this is one hell of a thing to admit! Secondly, Mr. Fisher
blurts out, "I believe the same can be said of globalization
today: We really do not understand how globalization works."
Scientists have concluded that at this point more brain cells
began popping. I can't believe what I am hearing! The central
banks have screwed things up so badly that they have concluded
that they do not know how things work anymore! Gaaahhh!

Thirdly, MR. Fisher admitted
that "Business is risky enough without the additional uncertainty
created when a nation's unit of account -- in plain language,
its money -- is undermined."

Okay, everyone agrees that
it was here that I lost it completely. By this admission, that
the dollar is being undermined, is some gigantic example of cognitive
dissonance, as I cannot reconcile the fact that this Fed bank
president KNOWS this, and yet seems unaware of the consequences!
Namely, 1) spending an inordinate amount of time tying up his
phone lines by calling him up, day after day, and wanting to
speak to "the big stupid butthead in charge" (which
is soon changed to "the big stupid butthead in charge, and
don't put me on hold!") and 2) the utter destruction of
the US economy, which is already bizarre, relying as it does
on government deficit-spending and "services." Because
I am here to tell you that IF there was a way, any way, any possible
way, any possible freaking way in hell to make a national Gross
Domestic Product out of providing services, then everybody, in
every country, in every period of time, in all of history would
have done it, and be being doing it right freaking now. And they
ain't going to, neither, because you can't make an economy out
of services.

You have to make stuff in a
value-added way. Like the Chinese who, according to Yanick Desnoyers,
senior economist at National Bank Financial, is going to register
"an enormous account surplus," which is "50% higher
than 2004. And more than 6% of GDP." What makes this interesting
is that the current-account deficit of the USA is about 6% of
our GDP! Perhaps this is what prompted him to say "China's
current account position is now almost the mirror image of America's
in terms of GDP." They make a surplus of 6% and we show
a deficit of 6%!

This is probably why China
has been engaging in what Mr. Desnoyers calls "constant
market interventions" in the currency markets to keep the
dollar strong, so that they can keep selling to Americans on
the cheap, and keep their hoard of US assets from falling in
price. They hope. But things are going to get a lot worse. A
lot worse.

Ugh.

***Mogambo sez: Sell everything and buy gold and silver and oil, and some guns to keep people
from taking your gold and silver
and oil away from you.

Richard Daughty
is general partner and C.O.O. for Smith Consultant Group, serving
the financial and medical communities, and the writer/publisher
of the Mogambo Guru economic newsletter, an avocational exercise
the better to heap disrespect on those who desperately deserve
it. The Mogambo Guru is quoted frequently in Barron's, The
Daily Reckoning
and other fine publications.